Here's How To Turn iHeartMedia Around: Sage Advice To The New Owners

At some point, iHeartMedia, the long-struggling radio giant, will emerge from bankruptcy, ideally as a restructured, reinvented company, with its debt-holders now at the helm as its new owners.

But that’s going to take lots of work andwhat’s likely to be a painful examination of the bad decisions behind the company’s collapse.

With that in mind, here are key steps the new owners would be advised to take.

Bring in real radio people to run the company. No matter how it’s restructured, iHeartMedia will remain a top radio company, and quite probably among the nation’s largest, if not the largest.

It needs smart, experienced radio people at the controls. Get rid of the financial whizz-bangers who leveraged the company up to its eyeballs in debt and brought about its collapse. Lesson learned.

Do radio, just radio, and do it right. Done right, radio alone can be very profitable. Sell off the other businesses that don’t directly support radio, such as ClearChannel Outdoor. Those businesses were acquired, and at huge cost, with the idea of creating cross-media synergies. Bad idea, bad execution, loads of problems best forgotten.

Program for listeners, only listeners. Early radio had the right idea. Entertain your listeners; advertising will follow. From its first days, iHeartMedia, then called Clear Channel, flipped it around: Please advertisers first. Listeners came in a distant second, if at all. As a business philosophy, it was doomed to fail. In time it did.

Let the reinvented iHeart loose to put listeners first, where they belong.

Right-size the radio business with a market-focused strategy

There was a time, before the internet, when having a huge numbers of stations in markets all across the country got you clout with national advertisers. No longer. Digital radio, the likes of Pandora, came long to give those advertisers other, often better options.

The smarter strategy for iHeart going forward is to build scale in select local markets where you can dominate, maximizing revenue and positioning for future growth. Invest in those markets. Build up your stations. Recruit on-air talent. Do great radio.

Get out of all markets that do not offer strategic value. You don’t need 850 stations. Your aim is to create a highly profitable, fully leveraged operation that’s also still manageable.

While you’re at it, decentralize management, stripping out layers of middle managers and putting decision making in the hands of local market managers. Radio is a local medium. It should be run that way.

Be the market leader, price like a market leader

For years, iHeartMedia went for market share, grabbing the most dollars from each advertiser, offering whatever discounts it needed to get the business and keep it from going to competitors. It’s a short-term strategy that may make the books look good, impressing investors, but it’s a terrible way to do business. It devalues your advertising, it makes it that much harder to boost rates in the future, and it hurts all of radio, devaluing the medium for advertisers and making it harder for your competitors to survive.

Commit to rate integrity. Set realistic rates and stick by them. Stand up for and believe in your brand. Stand up for and believe in radio.

Do digital right. iHeart, like so many radio companies, has had its struggles with digital, but some in radio are now putting digital to work for them in creative ways. Done right, digital can be a revenue generator and a powerful marketing tool.

Certainly don’t attack digital. In effect, you’re telling your advertiser he’s an idiot, not a good way to make a sale. Yet such attacks are still common. In a recent memo to employees, iHeart CEO Bob Pittman first praised radio then attacked digital. Referring to the recent unathorized harvesting of Facebook user data, he contended that social media advertisers are "not getting the 'influencers' they think they’re paying for; in fact, because of social media fraud, they’re often not getting real people, they’re getting ‘bots.’ "

The new owners can’t undo all that, but they can certainly acknowledge the company’s brutal past and vow to play by a new, cleaner set of rules. Win over advertisers by offering better opportunities to reach listeners. Win over listeners by giving them the entertainment they’re tuning in for.